A Look At Food Prices: Beef & Seafood Up; Dairy & Fruit Down
The CPI for all food increased 0.1 percent from May to June, was unchanged from April to May, and is now 2.7 percent above the June 2011 level. The food-at-home CPI was unchanged in June and is up 2.6 percent from last June, while the food-away-from-home (restaurant) index increased 0.2 percent in June and is up 2.9 percent from last June. The all-items CPI was down 0.1 percent in June and is 1.7 percent above the June 2011 level. The year-over-year increase in the food-at-home CPI has fallen each month so far in 2012, indicating that food price inflation had slowed prior ro the most recent drought-related events.
Beef prices were up 0.6 percent in June and are 6.9 percent above last June, with steak prices up 8.1 percent and ground beef prices up 7.3 percent. The current drought is anticipated to reduce cattle herd sizes due to increased feed costs which is expected, in turn, to increase the retail beef supply and reduce prices somewhat in the short term. Thus, the 2012 forecast for beef and veal prices has been revised downward to 3.5 to 4.5 percent. Pork prices decreased 0.1 percent in June and are 0.9 percent below last June's level. Retail prices have started to fall in accordance with wholesale prices, but a turn-around at all stages of production is likely as feed costs rise. Poultry prices increased 1.5 percent in June and are 5.1 percent above prices last year at this time, with chicken prices up 4.2 percent and other poultry prices (including turkey) up 8.3 percent. The poultry category is expected to be among the first to reflect price increases due to the drought, and ERS has revised its forecast upward to 3.5 to 4.5 percent in 2012.
Egg prices increased 0.5 percent in June; egg prices are now 3.2 percent above the June 2011 level. Egg price inflation is returning to historically average levels, as the domestic inventory of egg-laying hens in the U.S. continues to increase. Fish and seafood prices were up 0.4 percent from May to June and are 1.6 percent above the June 2011 level. Japanese output is expected to continue recovering throughout 2012, but seafood prices should remain high in 2012.
Dairy prices were down 0.3 percent from May to June, compared with a 0.4-percent decrease from April to May. Dairy prices are now 1.5 percent above the June 2011 level. Within the dairy category, prices changed as follows in June: milk prices were down 0.6 percent and are 1.4 percent below last June's prices; cheese prices were up 0.1 percent and are 2 percent above last June's level; ice cream and related product prices were down 2 percent and are 3.2 percent above last June's level; and butter prices decreased 1.4 percent this month and are 10.4 percent below last June. Fluid milk prices have followed a downward trajectory for most of 2012, as production has increased and exports have fallen. However, higher feed costs will have a direct effect on the dairy industry, and dairy prices may begin to rise as the impact of the drought is incorporated into the production supply chain.
Fresh fruit prices decreased 1.3 percent in June, and the fresh fruit index is up 3.3 percent overall from last year at this time, with apple prices up 9.2 percent, banana prices up 0.1 percent, citrus fruit prices up 1.6 percent, and other fresh fruit prices up 2 percent. The fresh vegetable index increased 1.8 percent in June, the first increase of 2012. Since last year at this time, fresh vegetable prices are down 3.6 percent, with potato prices down 3.4 percent, lettuce prices down 6.4 percent, tomato prices down 6.9 percent, and other fresh vegetable prices down 1.8 percent. Unseasonably warm weather and favorable growing conditions thus far in 2012 have resulted in prices and output for many vegetable crops that contrast sharply with prices and output for this time last year. Processed fruit and vegetable prices increased 0.4 percent in June and are 5.1 percent above the June 2011 level. Longer-term contracts within the processed fruit and vegetable industry kept price inflation below that for fresh fruits and vegetables throughout 2011. However, 2012 prices are expected to reflect increased fuel and commodity costs, and inflation is currently running above that of fresh produce.
Cereal and bakery product prices decreased 0.5 percent from May to June and are up 2.6 percent from last year at this time, with bread prices up 1.4 percent and breakfast cereal prices up 1.4 percent over the past year. Sugar and sweets prices were up 0.4 percent in June and are 3.8 percent above last June. Prices for nonalcoholic beverages, including coffee and carbonated beverages, are down 0.1 percent in June and are up 0.9 percent from last year.
The index for fats and oils was down 0.5 percent from May to June and is 6.1 percent above the June 2011 level. The significant price increases in 2011 were due in large part to surging soybean prices. Soybean prices face pressure in 2012 from both decreased production in South America as well as the drought in the U.S. ERS now anticipates that prices for fats and oils will increase 4 to 5 percent in 2012.